China’s aggressive drive towards covid-zero has kicked into high gear against omicron, with entire cities shutting down for weeks, closing factories and restricting ports, raising concerns that China’s efforts to contain runaway omicron portability are production and shipping delays for the battered people will lengthen or exacerbate global supply chain.
Companies are already seeing production delays. This week, Toyota said it had halted operations at its Tianjin plant, the Wall Street Journal reported, after the city imposed mandatory testing after detecting two cases of the omicron variant. Volkswagen also closed a factory there and in the port city of Ningbo, where a small outbreak occurred, the Journal reported.
Hong Kong-listed Shenzhou International, a supplier to Nike, Adidas and Uniqlo, said in a disclosure to the stock exchange that it had to suspend operations at several manufacturing sites in Ningbo from January 3, and operations had not fully resumed as of Monday ( pdf).
In Xi’an, which has been under strict lockdown since Dec. 23, where Samsung has memory chip factories, the company said last month it was forced to “change operations” as workers were unable to go to work due to covid restrictions.
Lockdowns in the coastal cities of Ningbo and Tianjin have also affected ports. Ningbo restricted truck traffic in and out of the port, delaying operations for much of December and prompting freight forwarders to divert shipments to various ports. This week, Tianjin, a city near Beijing with the largest port in northern China, began massive testing for its 14 million residents, forcing the port to temporarily close.
The southern city of Shenzhen, a manufacturing hub, also began mass testing after a cluster of four covid cases were discovered. The city is home to the port of Yantian, one of the world’s largest container ports, whose one-month closure due to a positive covid case last May has disrupted the global supply chain for weeks.
Officials have previously singled out ports as gateways for covid infection. In December, Xinhua, the state-run news agency, reported that the government would tighten covid controls in port cities.
China’s increasingly draconian covid-zero policy has resulted in some of the world’s lowest covid infection rates, with a cumulative total of about 104,000 confirmed cases since the start of the pandemic, compared to 61.5 million cases in the US.
According to Freightos, a Hong Kong-based freight booking platform, prices from Asia to the US west coast, which had seen a dip late last year, are up 16% from the previous week to $14,572 per container, and by 6 % from Asia to US East Coast up to $17,476 per container.